Stocks were down, and down sharply, for much of the day yesterday, but the closer we got to the release of Nvidia's earnings after the bell, the more buoyant stocks became and the indices closed strongly, and at their highs of the day. The Dow and S&P 500 turned losses into gains in those final minutes of trading, while the Nasdaq closed modestly lower, but 130-points off its intraday lows. Yields were up pushing the price of bonds lower and hurting small caps, and the dollar closed slightly lower.
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The late rally and positive reversals yesterday in the major indices was big news, but the odd action was all in anticipation of the market's latest, and biggest market mover. Nvidia represents the AI economy and investors are placing bets on whether the AI driven market is just hitting the tip of the iceberg - similar to the internet in the mid-to late 1990's, or if it getting overly hyped and overly priced like the bursting of the 2000 dot com bubble?
When Nvidia's earnings were initially released it was met with some skepticism as they beat estimates but investors and money managers were trying to figure out if they beat by enough, and guided high enough, to satisfy the lofty prices and gains it has had over the last few months and year. Nvidia's stock price had almost tripled in the last 12 months and it was up 11% over just the last month. How could they not disappoint?
Judging by the action in the first hour of trading after they released, they did not disappoint and the stock was volatile initially but trading up about 8% at my last check, which fills the open gap from Monday. Nice job, but it has more work to do to keep investors interested after getting some of their money back from that recent pullback. If it can't make new highs on this news in the coming days, it may be in trouble.
Whether the after hours gains hold into today's trading is no guarantee because we have seen stocks, including NVDA and the market indices as well, pop higher the day after a big report, only to see the rally fail and close down on the day making it a technical nightmare for the charts. Granted, the dips afterward are not always creating market peaks but overbought markets that fail on good news is a warning so keep an eye on the staying power of any rally in stocks triggered by Nvidia today.
A poor bond auction sent yields higher yesterday and that put some pressure on bonds and the stock market by midday. Stocks bounced back but bonds didn't and the 10-year yield closed at a 3-month high.
The dollar was down slightly after being up early and filling in a small overhead open gap. There's no issues with the trend yet after the recent pullback, but watch that 20-day EMA which has been holding all year on UUP.
The Dow Transportation Index led on the downside during the recent pullback, but it's trying to hold at a double dose of support where the 100-day EMA and the rising support line are crossing. 15,500 looks like a key pivot point.
I think the price of oil could be telling for the economy in the coming weeks or months. Other than the spike up last fall, this chart has been in a range between 67.50 and 82.50 for well over a year. That spike, however, could be the head of a head and shoulders pattern, which tend to break down. So, whichever way this breaks if or when it tests 82.50 again, it will be a good tell for the economy.
While we all want lower gas prices, if this breaks down it will more likely than not mean the economy is slowing down. If it breaks upward, that's good news for the economy, but it could also mean interest rates will be staying higher for longer. It sounds like a no win situation (higher gas price or a recession), but the other hand it could be a no lose situation (lower gas prices or better economic conditions) so, place your bets?
The S&P 500 (C-fund) chart experienced a modest pullback recently, but once again the 20-day EMA has held, and we have a chart that starts in the bottom left, and ends near the top right. I'm a big fan of trying to call tops and bottoms, but it isn't easy. When fast moving moving averages are holding, the bulls are in charge and you have to respect the trend. The bullish trend could end at any time, but it hasn't yet.
DWCPF (S-fund) fell below its 20-day EMA early yesterday but closed above it. The 20-day EMA has been holding but it may not be the best indicator for this chart since DWCPF consistently falls below it before popping back above it. There's probably a better one that I can use that others are following, which may make it a self-fulfilling indicator, but whatever works at any given time is OK with me. You just have to find it. 1950 looks like the support line that needs respect.
EFA (I-fund) closed at another new high after a small gain yesterday and a positive reversal off the early afternoon lows. The I-fund will be owed some of that gain we see in EFA since the late rally in the US didn't get taken into consideration. The 20 and the 50-day EMAs have been tested at various times here and the 50-day is holding when the 20-day EMA fails. But now it's above all of them and also above the resistance line, which may try to hold as support on any pullback.
BND (bonds / F-fund) was down sharply yesterday with yield moving up after Wednesday's bond auction. That's now 5 of 6 closes below the 50-day EMA and we have another test of the so called bull flag that I have been perhaps giving to much credit to. The G-fund is paying enough to avoid the F-fund when not in stocks, but if that support holds we could get a quick rebound in the F-fund.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
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The late rally and positive reversals yesterday in the major indices was big news, but the odd action was all in anticipation of the market's latest, and biggest market mover. Nvidia represents the AI economy and investors are placing bets on whether the AI driven market is just hitting the tip of the iceberg - similar to the internet in the mid-to late 1990's, or if it getting overly hyped and overly priced like the bursting of the 2000 dot com bubble?
When Nvidia's earnings were initially released it was met with some skepticism as they beat estimates but investors and money managers were trying to figure out if they beat by enough, and guided high enough, to satisfy the lofty prices and gains it has had over the last few months and year. Nvidia's stock price had almost tripled in the last 12 months and it was up 11% over just the last month. How could they not disappoint?
Judging by the action in the first hour of trading after they released, they did not disappoint and the stock was volatile initially but trading up about 8% at my last check, which fills the open gap from Monday. Nice job, but it has more work to do to keep investors interested after getting some of their money back from that recent pullback. If it can't make new highs on this news in the coming days, it may be in trouble.
Whether the after hours gains hold into today's trading is no guarantee because we have seen stocks, including NVDA and the market indices as well, pop higher the day after a big report, only to see the rally fail and close down on the day making it a technical nightmare for the charts. Granted, the dips afterward are not always creating market peaks but overbought markets that fail on good news is a warning so keep an eye on the staying power of any rally in stocks triggered by Nvidia today.
A poor bond auction sent yields higher yesterday and that put some pressure on bonds and the stock market by midday. Stocks bounced back but bonds didn't and the 10-year yield closed at a 3-month high.
The dollar was down slightly after being up early and filling in a small overhead open gap. There's no issues with the trend yet after the recent pullback, but watch that 20-day EMA which has been holding all year on UUP.
The Dow Transportation Index led on the downside during the recent pullback, but it's trying to hold at a double dose of support where the 100-day EMA and the rising support line are crossing. 15,500 looks like a key pivot point.
I think the price of oil could be telling for the economy in the coming weeks or months. Other than the spike up last fall, this chart has been in a range between 67.50 and 82.50 for well over a year. That spike, however, could be the head of a head and shoulders pattern, which tend to break down. So, whichever way this breaks if or when it tests 82.50 again, it will be a good tell for the economy.
While we all want lower gas prices, if this breaks down it will more likely than not mean the economy is slowing down. If it breaks upward, that's good news for the economy, but it could also mean interest rates will be staying higher for longer. It sounds like a no win situation (higher gas price or a recession), but the other hand it could be a no lose situation (lower gas prices or better economic conditions) so, place your bets?
The S&P 500 (C-fund) chart experienced a modest pullback recently, but once again the 20-day EMA has held, and we have a chart that starts in the bottom left, and ends near the top right. I'm a big fan of trying to call tops and bottoms, but it isn't easy. When fast moving moving averages are holding, the bulls are in charge and you have to respect the trend. The bullish trend could end at any time, but it hasn't yet.
DWCPF (S-fund) fell below its 20-day EMA early yesterday but closed above it. The 20-day EMA has been holding but it may not be the best indicator for this chart since DWCPF consistently falls below it before popping back above it. There's probably a better one that I can use that others are following, which may make it a self-fulfilling indicator, but whatever works at any given time is OK with me. You just have to find it. 1950 looks like the support line that needs respect.
EFA (I-fund) closed at another new high after a small gain yesterday and a positive reversal off the early afternoon lows. The I-fund will be owed some of that gain we see in EFA since the late rally in the US didn't get taken into consideration. The 20 and the 50-day EMAs have been tested at various times here and the 50-day is holding when the 20-day EMA fails. But now it's above all of them and also above the resistance line, which may try to hold as support on any pullback.
BND (bonds / F-fund) was down sharply yesterday with yield moving up after Wednesday's bond auction. That's now 5 of 6 closes below the 50-day EMA and we have another test of the so called bull flag that I have been perhaps giving to much credit to. The G-fund is paying enough to avoid the F-fund when not in stocks, but if that support holds we could get a quick rebound in the F-fund.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
